Scandlines Owners Said to Mull Deferring Sale on Low Bids

By Kiel Porter, Sheenagh Matthews and Aaron Kirchfeld -
Jul 4, 2013

The owners of Scandlines, 3i Group
Plc (III) and Allianz Capital Partners GmbH, are considering deferring
a sale of the Danish-German ferry operator after bids fell short
of expectations, people familiar with the matter said.

TPG Capital made an offer that values Scandlines at about
1.3 billion euros ($1.7 billion) while the owners are seeking
1.4 billion euros, said the people, who asked not to be
identified because the matter is private. TPG is the only
remaining bidder after Star Capital Partners Ltd. dropped out,
one of the people said. Danish ferry operator DFDS A/S (DFDS) already
said June 24 that it’s no longer bidding.

TPG and the Scandlines owners are still in talks to find an
agreement, the people said. Should the negotations fail, the
owners may refinance the company, which is based in Copenhagen
and Rostock, and restart the sale attempt later this year, the
people said. Representatives for 3i, Allianz Capital, TPG and
Star Capital declined to comment.

Scandlines, which operates ferries between Denmark and
Germany, face new competition from 2021, when the two countries
plan to complete a rail tunnel beneath the Fehmarn Belt strait.
3i and Allianz, which each own 49 percent with management
holding the rest, hired Goldman Sachs Group Inc. (GS) and ING Groep
NV (INGA) to advise and finance a sale.

Rising Earnings

The two private-equity investors, along with shipping
company Deutsche Seereederei GmbH, agreed in 2007 to jointly
acquire Scandlines from Germany’s national rail operator
Deutsche Bahn AG and the Danish government for 1.56 billion
euros. 3i and Allianz Capital Partners bought out Deutsche
Seereederei’s stake in 2010.

Scandferries Group, the holding company for Scandlines,
increased earnings before interest, tax, depreciation and
amortization by 27 percent to 212 million euros last year. Sales
stayed almost unchanged at 608 million euros after the company
sold its Baltic freight routes. The company forecast that
revenue and net income will grow as much as 5 percent this year
and next.